SUPREME COURT

FIRST DIVISION
RUBBERWORLD (PHILS.), INC. and
ELPIDIO HIDALGO,
Petitioners,
-versus-

G.R. No. 75704

July 19, 1989

THE NATIONAL LABOR RELATIONS

COMMISSION (THIRD DIVISION) and
NESTOR MALABANAN,
Respondents.
x---------------------------------------------------x
DECISION
MEDIALDEA, J.:
This is a Petition for Certiorari under Rule 65 of the Rules of Court
seeking the annulment of the decision of the respondent National
Labor Relations Commission dated June 17, 1986 (p. 23, Rollo) in
NLRC NCR Case No. 6-2158-84 entitled Nestor Malabanan and
Jonathan Transmil, Complainants, versus Rubberworld (Phils.), Inc.
and Elpidio Hidalgo, Respondents, reversing the decision of the
Labor Arbiter which dismissed the complaint for illegal dismissal for
lack of merit.
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The antecedent facts are as follows:

Respondent Malabanan was employed by petitioner Rubberworld

(Phils.), Inc. on September 25, 1978 as an ordinary clerk. In May,
1980, he was promoted to the position of production scheduler with a
corresponding salary increase. He was again transferred to the
Inventory Control Section as stock clerk on September 1, 1983.
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On April 6, 1984, Elpidio Hidalgo, the Plant I General Manager of

petitioner company, received a copy of the Financial Audit Report
from the Internal Audit Department of the company showing a
significant material variance between the year-end actual inventory
and that of the Cards (SC)/EDP Control Records. As a result thereof,
Noel Santiago, Section Head of the Inventory Control Section, where
respondent Malabanan was assigned, conducted an investigation of
the reported discrepancies in the stock cards upon the request of the
Plant General Manager. Santiago then submitted his report to the
general manager recommending the dismissal of respondent
Malabanan.
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Consequently, Malabanans case was endorsed to the Human

Resources Division of petitioner company, which conducted a
reinvestigation on the matter and which affirmed the
recommendation of the Inventory Control Section Head for the
termination of employment of respondent Malabanan.
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On June 6, 1984, respondent Malabanan was dismissed by petitioner

company.
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On June 16, 1984, respondent Malabanan, along with another

complainant named Jonathan Transmil, filed a complaint for unfair
labor practice and illegal dismissal against petitioner company
alleging that they (respondent Malabanan and complainant Transmil)
were members of the monthly salaried employees union affiliated
with TUPAS; that petitioner company forced them to disaffiliate from
the union; and that due to their refusal to resign from the union, they
were ultimately dismissed from employment by petitioner company.
Petitioner company on the other hand, denied complainants
allegations and averred that respondent Malabanans dismissal was

due to gross and habitual neglect of his duty and not due to his union
affiliation.
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During the hearing of the case, the other complainant, Jonathan

Transmil withdrew from the case since he already found another
employment abroad.
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On January 30, 1985, the Labor Arbiter rendered a decision (pp. 1722, Rollo), the dispositive portion of which reads:
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WHEREFORE, premises considered, this case should be, as it

is hereby, DISMISSED, for lack of merit.
SO ORDERED.
Respondent Malabanan appealed from the adverse decision to the
respondent Commission. On June 17, 1986, respondent Commission
reversed the appealed decision of the Labor Arbiter and stated, inter
alia:
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Confronted with this factual backgrounds, we find ourselves

inclined to the view that the appealed decision merits a reversal.
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x x x
WHEREFORE, premises considered, the appealed decision
should be, as it is hereby REVERSED. Consequently, the
respondents are directed to reinstate complainant Nestor
Malabanan to his former position as production scheduler, with
full backwages from the time he was illegally terminated up to
actual reinstatement, without loss of seniority rights and
benefits appurtenant thereto.
SO ORDERED. (pp. 23-27, Rollo)
The petitioner company moved for a reconsideration on the ground
that the respondent Commissions decision is not in accordance with
facts and evidence on record. On July 23, 1986, the said motion for
reconsideration was denied.

On September 3, 1986, petitioner filed the instant petition contending

that the respondent Commission committed grave abuse of discretion
amounting to lack of jurisdiction in reversing the Labor Arbiters
decision.
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The two issues to be resolved in the instant case are: (1) whether or
not the dismissal of respondent Malabanan is tainted with unfair
labor practice; and (2) whether or not a just and valid cause exists for
the dismissal of private respondent Malabanan.
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Petitioner alleges that the National Labor Relations Commission

gravely erred in concluding that the demotion of Malabanan from
production scheduler to a stock clerk at the Stock and Inventory
Section was intended to discourage Malabanan from union
membership. It argued that the Labor Arbiter was correct in finding
that the private respondent had not shown ample proof to the effect
that he was a member of a labor organization prior to his transfer to
another position.
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We believe that the foregoing contentions are impressed with merit.

Art. 248 of the Labor Code, PD No. 442, as amended, provides:
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Art. 248. Unfair labor practices of employers. It shall be

unlawful for an employer to commit any of the following unfair
labor practices:
(a) To interfere with, restrain or coerce employees in the
exercise of their right to self-organization;
x

x x

The question of whether an employee was dismissed because of his

union activities is essentially a question of fact as to which the
findings of the administrative agency concerned are conclusive and
binding if supported by substantial evidence. Substantial evidence
has been defined as such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion. It means such
evidence which affords a substantial basis from which the fact in issue
can be reasonably inferred (Philippine Metal Foundries, Inc. vs. Court
of Industrial Relations, et. al., No. L-34948-49, May 15, 1979, 90

SCRA 135). The findings of the Labor Arbiter on the non-existence of

unfair labor practice on the part of the company are more in accord
and supported by the evidence submitted by the parties in the instant
case, to wit:
Complainant had stated that he was a member of the monthly
salaried employees union affiliated with TUPAS. He, however,
offered no proof to support his allegation. In fact, no evidence
was presented to prove the existence of such union. We [note]
from the records that, as the usual practice, in cases like this
one, complainant is usually supported by the union of which he
is a member. And ordinarily, the union itself is impleaded as a
co-complainant. Such circumstances, surprisingly, [are not
present in this case. In fact, complainant categorically alleged
that he had solicited the services of the PAFLU Labor Union in
filing this case. It is, indeed, surprising that complainant had to
solicit the help of a labor union (PAFLU) of which he was not a
member instead of soliciting the aid of the labor union (TUPAS)
of which he was allegedly a member. These circumstances alone
[destroy] the credibility of complainants allegations. (p. 21,
Rollo).
Nowhere in the records can We find that the company actually
performed positive acts to restrain the union participation of private
respondent. For one, it is doubtful whether Malabanan was really
engaged in the organization of a labor union affiliated with the
federation TUPAS. The only evidence presented by him to prove this
contention is his affidavit and that of his father. It is therefore, not in
accordance with ordinary experience and common practice that the
private respondent pursued his battle alone, without the aid and
support of his co-members in the union and his federation especially
in a case of serious nature as this one involving company intervention
with union activity.
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As a rule, it is the prerogative of the company to promote, transfer or

even demote its employees to other positions when the interests of
the company reasonably demand it. Unless there are instances which
directly point to interference by the company with the employees
right to self-organization, the transfer of private respondent should be
considered as within the bounds allowed by law. Furthermore,

although private respondent was transferred to a lower position, his

original rank and salary remained undiminished, which fact was not
refuted or questioned by private respondent.
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In view of the foregoing conclusions of the Labor Arbiter, We are

compelled to agree with the latter that the petitioner company did not
commit any unfair labor practice in transferring and thereafter
dismissing private respondent.
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The remaining issue to be resolved on this point is whether the

dismissal of respondent Malabanan was for a just and lawful cause.
Article 282 of the Labor Code, as amended, provides:
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Article 282. Termination by employer. An employer may

terminate an employment for any of the following just causes:
x x x
b) Gross and habitual neglect by the employee of his
duties;
x

x x

Petitioner contends that private respondent Malabanan was guilty of

gross negligence when he caused the posting of incorrect entries in
the stock card without counter checking the actual movement status
of the items at the warehouse, thereby resulting into unmanageable
inaccuracies in the data posted in the stock cards. The respondent
Commission correctly ruled:
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Penultimately, even assuming for the sake of argument that

herein complainant posted entries in the stock card without
counter checking the actual movement status of the items at the
warehouse, thereby resulting in an inaccurate posting of data on
the stock cards, to our impression does not constitute as a just
cause for dismissal. Records show that he was only transferred
to the Inventory Control Section on September 1, 1983 and was
not so familiar and experienced as a stock clerk, and prior to his
transfer, the record shows no derogatory records in terms of his
performance. His failure to carry out efficiently his duties as a

stock clerk is not so gross and habitual. In other words he was

not notoriously negligent to warrant his severance from the
service. Considering that there is nothing on record that shows
that he wilfully defied instructions of his superior with regards
to his duties and that he gained personal benefit of the
discrepancy, his dismissal is unwarranted (p. 26, Rollo).
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It does not appear that private respondent Malabanan is an

incorrigible offender or that what he did inflicted serious damage to
the company so much so that his continuance in the service would be
patently inimical to the employers interest. Assuming, in gratia
argumenti that the private respondent had indeed committed the said
mistakes in the posting of accurate data, this was only his first
infraction with regard to his duties. It would thus be cruel and unjust
to mete out the drastic penalty of dismissal, for it is not proportionate
to the gravity of the misdeed.
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In fact, the promotion of the private respondent from the position of

ordinary clerk to production scheduler establishes the presumption
that his performance of his work is acceptable to the company. The
petitioner even admitted that it was due to heavy financial and
business reverses that the company assigned the private respondent
to the position of Stock Clerk and not because of his unsatisfactory
performance as production scheduler (p. 6, Rollo). It has been held
that there must be fair and reasonable criteria to be used in selecting
employees to be dismissed (Asiaworld Publishing House, Inc. vs.
Ople, No. L-56398, July 23, 1987, 152 SCRA 219).
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It is worthy to note that the prerogative of management to dismiss or

lay-off an employee must be done without abuse of discretion, for
what is at stake is not only petitioners position, but also his means of
livelihood. This is so because the preservation of the lives of the
citizens is a basic duty of the State, more vital than the preservation of
corporate profits (Euro-Linea, Phils., Inc. vs. NLRC, L-75782,
December 1, 1987, 156 SCRA 79).
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The law regards the worker with compassion. Our society is a

compassionate one. Where a penalty less punitive would suffice,
whatever missteps may be committed by the worker should not be
visited by the supreme penalty of dismissal. This is not only because

of the laws concern for the working man. There is in addition, his
family to consider. After all, labor determinations should not only be
secundum caritatem but also secundum caritatem (Almira, et al., vs.
BF Goodrich Philippines, Inc., et al., G.R. No. L-34974, July 25, 1974,
58 SCRA 120).
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ACCORDINGLY, the petition is DISMISSED for lack of merit.

However, the decision of the public respondent is hereby
MODIFIED to the effect that petitioner company is ordered to
reinstate private respondent Nestor Malabanan to the position of
stock clerk or substantially equivalent position, with the same rank
and salary he is enjoying at the time of his termination, with three
years backwages and without loss of seniority rights and benefits
appurtenant thereto.
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Should the reinstatement of the private respondent as herein ordered

be rendered impossible by the supervention of circumstances which
prevent the same, the petitioner is further ordered to pay private
respondent separation pay equivalent to one (1) months salary for
every year of service rendered, computed at his last rate of salary.

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SO ORDERED.
Narvasa, Cruz, Gancayco and Grio-Aquino, JJ., concur.

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